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Is The Federal Reserve a Criminal Syndicate?.

Is the Federal debt a criminal enterprise, enabled by a criminal syndicate? Read on before you pass judgment.

Correspondent Doug laid out a compelling case that the Federal debt is fundamnentally a criminal scam, operated by the criminal syndicate of the Treasury and the Federal Reserve:

The Federal Reserve is a criminal syndicate buying debt that the government eagerly creates and sells for spending money that dumps the debt on us civilians. What perplexes me is that the scam is so simple and all the intellectuals either don’t get it or are handcuffed by mega-corporate media owners.The scam in simple terms:

4. The debt is breaking us; life will not be the same in the years to come

Uncle Sam borrows all its spending money from the non-government Fed and others, and spends only borrowed dollars raised from exchanging bonds for dollars as a debt plus interest on your back.

Uncle Sam collects income taxes and funnels the money to the holders of these criminal Treasury bonds.

The Fed/Treasury is an evil axis defunding you and me: the debt is $14.5 trillion; this is our debt, not the government’s debt. The government does not generally earn money; we do. Therefore every criminal debt certificate (Treasury bond) the Treasury exchanges for cash is a debt on you and me–a promise to pay for which citizens are responsible to pay, IOUs in simple terms. If the government printed the money instead of the criminal Fed, there would be no debt.

Uncle Sam borrows bucks and you become automatically indentured to pay back the bond and pay the vig! How is this not a criminal enterprise? If you go to a loan shark, at least you get to have the money in your hand and can spend it before you have to repay the loan and pay the vig!

Thank you, Doug, for explaining the criminal nature of the Federal Debt and the agencies and Fed that enable and enforce it. As we know, the Federal budget (and the “supplemental appropriations” that add hundreds of billions of dollars in “off-budget” spending) is consolidated. In other words, the government doesn’t specify that taxes collected paid for X spending and that the remaining Y spending is paid by borrowing money via selling TReasury bonds, so what spending is “paid by debt” is a politically charged assessment.

What the ballooning debt actually funds depends on the political convictions and agenda of the commentator, along with what constitutes “waste” in Federal spending. Some attribute the Federal deficit/borrowing to Medicare, others to hot wars and the Military-Industrial Complex, and still others to the endless bail-outs of financial Elites.

The common-sense perspective is to compare the circa 2000-01 $2.1 trillion annual Federal budgets of the pre-Global War on Terror (GWOT) and multi-trillion dollar bail-outs of banks/financial Elites with today’s $3.8 trillion annual budget (not counting all the political hot-potato spending hidden in “supplemental appropriations” to keep it out of the scrutinized budget). Since inflation was officially low for most of the decade, this vast increase in Federal spending cannot be explained as inflation; adjusted into real dollars (adjusted for inflation), it is still 40% pre-war, pre-bail-out levels.

Yes, Medicare spending is rising at 6%-7% annually, regardless of which political party is in power, and Social Security spending is outsripping the system’s tax revenue income. But clearly, a National Security State with few if any meaningful restraints on its spending (no “anti-terrorist” dictatorship shall go unrewarded/unfunded, etc.) or influence has added trillions in spending with little oversight or accountability.

The same can be said of the endless trillions squandered bailing out the banks and related financial Elites, including the quasi-Federal agencies (Fannie Mae and Freddy Mac) that funded the criminal enterprise known as the housing bubble/bust.

If the majority of the additional Federal spending was in fact squandered to boost the revenues, earnings and political influence of Elites, fiefdoms and special interests, then the taxpaying citizenry footing the bill did not receive any measurable benefit from all this additional debt. As Doug observed, the taxpayers are in effect borrowing vast sums from the loan sharks and not even getting to spend the money on themselves: the money was squandered on Elites, supposedly on behalf of the taxpayers, who must pay interest (i.e. the vig, “vigorish”) on the fast-rising debt.

About The Author

Charles Hugh Smith writes the Of Two Minds blog (www.oftwominds.com/blog.html) which covers an eclectic range of timely topics: finance, housing, Asia, energy, longterm trends, social issues, health/diet/fitness and sustainability. From its humble beginnings in May 2005, Of Two Minds now attracts some 200,000 visits a month. Charles also contributes to AOL’s Daily Finance site (www.dailyfinance.com) and has written eight books, most recently “Survival+: Structuring Prosperity for Yourself and the Nation” (2009) which is available in a free version on his blog.